TECHNICAL REPORT. SALARES 7 PROPERTY Region III, Chile

Transcription

1 P2P Health Systems Inc. TECHNICAL REPORT on the SALARES 7 PROPERTY Region III, Chile MAPS IGM , IGM IGM , IGM IGM , IGM Latitude 26 15' 15" south Longitude 68 48' 30" west for P2P HEALTH SYSTEMS INC. Suite 960, 1055 West Hastings Street Vancouver, BC V6E 2E9 Telephone: Fax: by THOMAS H. CARPENTER, B.Sc., PGeo TAIGA CONSULTANTS LTD. Unit 101, th Avenue NE Calgary, AB T2A 2L9 Telephone: Fax: taigaltd@taiga-ltd.com August 31, 2009

2 P2P Health Systems Inc. i Table of Contents 1. Summary Introduction and Terms of Reference Reliance on Other Experts Property Location and Description Location Concession Data Third-Party Concessions Surface Rights Access, Climate, Local Resources, Infrastructure, and Physiography Access Climate Local Resources and Infrastructure Physiography History Area History Previous Work Geology Regional Geology Property Geology Deposit Types Mineralization Exploration Water Sampling Target Description and Exploration Results Salar de Agua Amarga Salar de la Isla Salar de las Parinas Salar Grande Salar de Aguilar Salar de Piedra Parada Salar de Maricunga Drilling Sampling Method and Approach Sample Preparation, Analysis, and Security Data Verification Adjacent Properties Mineral Processing and Metallurgical Testing Mineral Resource and Mineral Reserve Estimates Other Relevant Data And Information Interpretations Conclusions Recommendations Proposed Budgets References...75

3 P2P Health Systems Inc. ii 24. Date and Signature Certificate Of Author...78 List of Figures Figure 1a Location Map... 5 Figure 1b Google Earth Map of Properties... 6 Figure 2a Salar de Agua Amarga Exploration Concessions, 1:50, Figure 2b Salar de la Isla Exploratin Concessions, 1:100, Figure 2c Salar de las Parinas Exploration Concessions, 1:75, Figure 2d Salar Grande Exploration Concessions, 1:75, Figure 2e Salar de Aguilar Exploratin Concessions, 1:75, Figure 2f Salar de Piedra Parada Exploration Concessions, 1:75, Figure 2g Salar de Maricunga Exploitation Concessions, 1:50, Figure 3 Regional Geology, 1:250, Figure 4 Salar Drainage Basins, 1:250, Figure 5a Salar de Agua Amarga 1999: Li, K, Na Water Geochemistry, 1:75, Figure 5b Salar de Agua Amarga 2009 : Li, K, Na Water Geochemistry, 1:75, Figure 6a Salar de la Isla, 1999 Li, K, Na Water Geochemistry, 1:75, Figure 6b Salar de la Isla, 2009 Li, K, Na Water Geochemistry, 1:75, Figure 7a Salar de las Parinas, 1999 Li, K, Na Water Geochemistry, 1:75, Figure 7b Salar de las Parinas, 2009 Li, K, Na Water Geochemistry, 1:75, Figure 8a Salar Grande, 1999 Li, K, Na Water Geochemistry, 1:75, Figure 8b Salar Grande, 2009 Li, K, Na Water Geochemistry, 1:75, Figure 9 Salar de Aguilar, 1999 Li, K, Na Water Geochemistry, 1:75, Figure 10 Salar de Piedra Parada, 1999 Li, K, Na Water Geochemistry, 1:50, Figure 11a Salar de Maricunga, 1999 Li, K, Na Water Geochemistry, 1:150, Figure 11b Salar de Maricunga, 2009 Li, K, Na Water Geochemistry, 1:50, List of Tables Table 1 Salar de Agua Amarga Concessions... 9 Table 2 Salar de la Isla Concessions Table 3 Salar de las Parinas Concessions Table 4 Salar Grande Concessions Table 5 Salar de Aguilar Concessions Table 6 Salar de Piedra Parada Concessions Table 7 Salar de Maricunga Concession Table 8 Salar Grande Third Party Concessions Table 9 Salar de Aguilar Third Party Concession Table 10 Salar Parameters Table 11 Salar de Agua Amarga Water Geochemistry (1999) Table 12 Salar de Agua Amarga Water Geochemistry (2009) Table 13 Salar de la Isla Water Geochemistry (1999) Table 14 Salar de la Isla Water Geochemistry (2009) Table 15 Salar de las Parinas Water Geochemistry (1999)... 48

4 P2P Health Systems Inc. iii Table 16 Salar de las Parinas Water Geochemistry (2009) Table 17 Salar Grande Water Geochemistry (1999) Table 18 Salar Grande Water Geochemistry (2009) Table 19 Salar de Aguilar Water Geochemistry (1999) Table 20 Salar de Piedra Parada Water Geochemistry (1999) Table 21 Salar de Maricunga Water Geochemistry (1999) Table 22 Salar de Maricunga Water Geochemistry (2009) List of Photographs Photo 1 View of road constructed across Salar de Azufrera to old sulphur recovery mill site. 26 Photo 2 Surface of Salar de Agua Amarga showing coarsely crystalline rock salt surface Photo 3 Sample site at Salar de las Parinas showing smooth salt crust both beside and underlying the shallow lagoon, and the development of polygons Photo 4 View westerly across the northern end of Salar Grande showing broad alluvial plains in foreground and background. The material within these plains may have acted as a source for lithium-bearing fluids. The photo shows approximately 6 km of the 11 km long salar. The width of the salar in the centre of the photo is 3 km Photo 5: View to southeast across Salar de la Isla. Sample was collected from spring water in the foreground emanating from a rock bluff immediately behind the photo location. Sample was collected from the lagoon area. The distance across the salar in the direction of the photograph is approximately 13.5 km. The lagoon in the middle distance is approximately 200 metres in width Photo 6 Water sampling from a shallow lagoon on the margin of Salar de las Parinas utilizing a container attached to a 3-metre long pole. As is typical of many of the sample sites the shallow lagoon is underlain by salt Photo 7 Sampling container attached to a 3-metre long pole. Water samples were placed in a pre-numbered bottle and sealed with tape

5 P2P Health Systems Inc Summary At the request of Mr. Todd Hilditch of P2P Health Systems Inc ( P2P ), this Technical Report ( Report ) has been made by Taiga Consultants Ltd. ( Taiga ) on the Salares 7 Lithium Property ( Property ) located in Region III, Chile. The Report incorporates a summary of previous work and an appraisal of the exploration potential of the Property, and makes recommendations for further work. Though the salars that comprise the Property also contain significant quantities of potassium, a commodity that is in increasing demand worldwide as a fertilizer, the main exploration focus on the Property is the lithium contained in brines. Salars represent a lithium exploration target of some potential due to the low capital cost necessary to put this deposit type into production and the low cost of production to produce a marketable lithium product. Northern Chile, which includes the extremely arid Atacama Desert and the semi-arid Andean Highlands, contains more than 100 closed basins that contain brine lakes known as salars (English) or salares (Spanish) that contain anomalous levels of lithium and potassium. The area of the internal drainage in northern Chile comprises 98,400 km² and, of this area, 7200 km² comprise salars and clay playas. P2P Health Systems Inc. ( P2P ) has entered into a letter agreement dated May 22, 2009, with Salares Atacama SCM (SALA), a private Chilean incorporated company, and its individual shareholders, members of the Vecchiola Trabucco family of Copiapó, Chile. Pursuant to the agreement, P2P has the option to acquire up to 70 per cent of the outstanding share capital of SALA. SALA is the 100-per-cent owner of seven salars known as: Salar de Agua Amarga, Salar de la Isla, Salar de las Parinas, Salare Grande, Salar de Aguilar, Salar de Piedra Parada, and Salar de Maricunga in Chile's Region III (Atacama). Limited historical sampling has reported anomalous lithium and potash levels in brines on all of the concessions. Brine sources for lithium production accounted for over 60 per cent of the world's primary supply in As noted, lithium demand is predicted to increase in the coming years owing to its increased use in batteries for use in electric and hybrid/electric automobile applications. Potash prices, due to the increased demand for fertilizers in India and China, have also reached record prices in recent years. The property, however, is mainly being evaluated for its lithium potential. The transaction is at arm's length, and will result in P2P s reactivation and graduation from the NEX Board to the TSX Venture Exchange as a Tier 2 mining issuer. A field visit was carried out to the Property by the author from June 18 to June 25, 2009 during which 5 of the 7 salars were visited and sampled for the purposes of this Report. Two of the salars were unable to be visited at the time of the field visit due to field conditions relating to the onset of winter in the southern hemisphere. The purpose of the Report is to demonstrate that the Property is a Property of Merit as a Qualifying Transaction for P2P.

6 P2P Health Systems Inc. 2 The Property, comprising exploration and exploitation concessions over 5 salars in their entirety, one half of a sixth salar and a portion of a seventh salar, contains 39,404 hectares as detailed in Section 4.2. The Property consists of salars (salt lakes) and playas contained within closed valleys of the Andean Highlands. The salars are largely underlain and surrounded by volcanic rocks of andesitic to basaltic affinity that make up some of the 800 volcanoes located in the Andes of northern Chile. Geochemical analysis of the 25 water samples collected from the Property during the field visit confirms that the salars are lithium- and potassium-bearing in quantities which are highly anomalous and indicative of the positive lithium potential of the P2P salars in general. The 2009 results mirror results obtained from a 1995 to 1998 program study carried out by a consortium of governmental and non-governmental organizations that documented significant lithium and potassium values in waters collected from the salars. The results of both surveys warrant further exploration of the salars. Further exploration is designed to define high lithium- and potassium-bearing brines developed within the salars as a result of the evaporitic concentration of lithium and potassium from anomalously lithium- and potassium-bearing waters flowing into the basins. No previous mineral exploration or development for lithium and potassium or other commodities have been carried out on the Property and there is no disturbance as a result of such activities. Recommendations for future exploration include Transient Electromagnetic (TEM) surveys to define saline-rich zones within the salars, systematic sampling of waters below the salt pans covering the salars and sampling of lagoons and springs feeding the salars, the latter to give an indication of possible sources of lithium-bearing waters. A recommended Phase II program would comprise systematic drill testing and sampling of brines defined by the geophysical surveys. A recommended Phase I budget is estimated at $417,000. A Phase II budget, contingent on the success of the Phase I program is estimated at $880,900.

7 P2P Health Systems Inc Introduction and Terms of Reference The author of this Technical Report ( Report ), Thomas H. Carpenter, PGeo, ( Carpenter ), of Discovery Consultants ( Discovery ), was requested by Mr. Todd Hilditch of P2P Health Systems Inc. ( P2P ), a British Columbia registered company, and by Taiga Consultants Ltd. ( Taiga ) to undertake an independent review of all available geological and geochemical reports and data on the Salares 7 Property ( Property ). The Property comprised valid exploration concessions covering all of five salars (salt flat, salt lake), half of a sixth salar and a portion of a seventh salar in the Andean Highlands of Region III, Chile (Figures -1, -1b). The salars have been historically demonstrated to contain lithium- and potassium-bearing brines, two commodities which are currently in demand as ingredients for lithium batteries and fertilizer. In May of 2009, P2P entered into negotiations with Salares Atacama SCM ( SALA ), a private Chilean incorporated company, based in Copiapó, Chile, whereby P2P may enter into an option agreement on the Property. The purpose of this report is to demonstrate that the Property is a Property of Merit as a Qualifying Transaction for P2P. Under the agreement, P2P has the exclusive right and option to acquire: An initial 50-per-cent ownership interest in SALA and, indirectly, the concessions, upon filing with the Canadian regulatory authorities a National Instrument compliant technical report regarding the concessions and carrying out expenditures on the concessions of $2.5-million (U.S.) on or before the third anniversary of the entering into by the parties of the definitive agreement (as defined below); An additional 20-per-cent ownership interest in SALA and, indirectly, the concessions, upon completion, at P2P's expense, and delivery to SALA's board of directors of a bankable feasibility study on the concessions within 24 months from the date the first option is exercised. Notwithstanding that P2P may elect to exercise the first option, P2P has no obligation to complete and deliver the feasibility study or exercise the second option. If P2P exercises the first option but does not exercise the second option, P2P will retain its 50-per-cent ownership interest in SALA. If the first option is terminated other than by the exercise thereof, P2P will have no further obligations or interest in the concessions. Upon completion of the feasibility study, P2P will have the exclusive right to arrange for project financing for the concessions which are the subject of the feasibility study. According to the United States Geological Survey, overall demand for lithium worldwide is growing at a rate of 4 to 5% per year. Demand for lithium destined for battery usage is predicted to grow by 20% per year. Over 60% of mobile phones and 90% of laptop computers feature lithium-ion batteries. The worldwide market for rechargeable lithium batteries is estimated to be worth over $4 billion/year. The automotive market alone is projected to reach $337 million in 2012 and $1.6 billion by 2015 (Mills, 2009).

8 P2P Health Systems Inc. 4 The U.S. contains approximately three percent of the world's lithium reserves. Presently Chile provides 61 percent of lithium exports to the United States, and Argentina is the source of 36 percent. Bolivia, at an estimated fifty percent of world supply, has by far, the largest lithium deposits of any country. However the recent nationalization of Bolivia s oil and natural gas industries has created a growing concern that the same may happen with lithium. Lithium is not traded publicly. Instead it is sold directly to end users for a negotiated price per tonne or pound of lithium carbonate (Li 2 CO 3 ). High demand and low supply have recently caused reported paid end user prices to reach US$6,600/ton (C$7,260/tonne). At present, annual demand in North America alone is about 100,000 tonnes of lithium carbonate equivalent (Mills, 2009). A cell phone battery contains one unit of lithium, a hybrid car 3,000 units and an electric car 7,000 units, equivalent to 9 to 30 kilograms of lithium oxide per car battery. The automotive industry requires a secure supply of lithium to ramp up its production of the next generation of hybrid/electric vehicles using lithium-ion batteries. An advantage of lithium-ion battery packs over other batteries is that they can be manufactured to any shape or size, thereby making them easy to fit into any car design. As well lithium batteries have no memory effect, therefore making them easier for drivers to charge and maintain and they have a high energy-toweight ratio, helping to increase efficiency. Most new hybrids and hybrid concept cars currently being introduced rely on lithium-ion battery technology. The scope of the Report includes a description of the general setting of the Property, a review of previous exploration work carried out and a summary of the results obtained by sampling collected during a property visit carried out by the author from June 18 to June 25, The Report concludes with recommendations for further work. Taiga was provided copies of geological maps of the Property and reports on studies of the salars in northern Chile carried out by the United Stated Geological Survey and the Chilean Department of Public Works in conjunction with various non-governmental organizations by independent contractor Georecursos Consultores Ltda. ( Georecursos ) of Santiago, Chile. Georecursos also provided mineral title information. Information was also obtained online from various mining industry publications.

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11 P2P Health Systems Inc Reliance on Other Experts For the purposes of this Report, Taiga and Carpenter have relied upon title information provided to Dr. Luis Ignacio Silva of Georecursos by Reinaldo Flores of Landman Service S.A. of Santiago, Chile. For the preparation of this Report, Carpenter and Taiga have relied upon topographic maps published by the Chilean Instituto Geográfico Militar and geological maps produced by Chile s Servicio Nacional de Geologia y Mineria. The Property has not previously been the subject of exploration other than that carried out during academic studies that are not subject to the controls mandated by National Instrument and much of the data are not verifiable. The historical data is useful however as an indication that the salars on the properties have some basic potential for hosting lithium deposits. A general description of these studies is presented under Exploration History but the reader is cautioned that past work and the results obtained may not be of a currently acceptable standard. To the extent possible under the mandate of a National Instrument review, Carpenter and Taiga have endeavoured to verify the material facts relating to the prospectivity of the Property. 4. Property Location and Description 4.1 Location The Property area is located in Region III of Chile in the Atacama Desert area. The approximate geographic centre of the northern portion of the Property, comprising the five more closely grouped salars, a point halfway between Salar de la Isla and Salar Aguilar, is located 290 kilometres southeast of the city of Antofagasta and 235 kilometres northeast of the city of Copiapó. Antofagasta and Copiapó are located approximately 1080 and 804 kilometres north of Santiago respectively via Highway 5 and are serviced by daily flights by LAN Chile Express from Santiago. The 7 salars that are the subject of this report are bounded by latitudes 25 30' 30" south to 27 00' 00" south and longitudes 68 28' 00" west to 69 09' 00" west. The centre of this rectangle is located at 26 15' 15" south latitude and 68 48' 30" west longitude. All services required for a major exploration or mining program are available in Copiapó and Antofagasta, both of which are major mining centres.

12 P2P Health Systems Inc Concession Data A total of 142 exploration concessions, comprising an aggregate of 39,300 hectares, are held in trust for SALA by Edgar Vecchiola Trabucco, a director of SALA. These concessions cover almost the entire salar areas of Salar de Agua Amarga, Salar de la Isla, Salar de las Parinas, Salar Grande and Salar Aguilar; and half of Salar de Piedra Parada. The SALA exploitation concession of 104 hectares at the northeast corner of Salar de Maricunga, held in trust by Empresa Vecchiola (the Vecchiola Company), covers only a portion of the salar, the majority of which is covered by a patchwork of individual concessions. A portion of Salar de Aguilar (306 hectares) at its south end is covered by a pre-existing exploitation concession. As well some 335 hectares of Salar Grande are covered by pre-existing exploration concessions. All exploration concessions are map-staked by latitude and longitude and, as a result, there are no boundary markers in the field. Boundaries were located in the field with the use of a hand-held GPS. At the point a concession passes from exploration to exploitation it must be surveyed by a licensed land surveyor and the corners of the property are physically marked in the field with concrete monuments. As noted in Section 2, in May of 2009, P2P entered into negotiations with Salares Atacama SCM ( SALA ), a private Chilean incorporated company, based in Copiapó, Chile, whereby P2P may enter into an option agreement on the Property. The purpose of this report is to demonstrate that the Property is a Property of Merit as a Qualifying Transaction for P2P. Under the agreement, P2P has the exclusive right and option to acquire: An initial 50-per-cent ownership interest in SALA and, indirectly, the concessions, upon filing with the Canadian regulatory authorities a National Instrument compliant technical report regarding the concessions and carrying out expenditures on the concessions of $2.5-million (U.S.) on or before the third anniversary of the entering into by the parties of the definitive agreement (as defined below); An additional 20-per-cent ownership interest in SALA and, indirectly, the concessions, upon completion, at P2P's expense, and delivery to SALA's board of directors of a bankable feasibility study on the concessions within 24 months from the date the first option is exercised. Notwithstanding that P2P may elect to exercise the first option, P2P has no obligation to complete and deliver the feasibility study or exercise the second option. If P2P exercises the first option but does not exercise the second option, P2P will retain its 50-per-cent ownership interest in SALA. If the first option is terminated other than by the exercise thereof, P2P will have no further obligations or interest in the concessions. Upon completion of the feasibility study, P2P will have the exclusive right to arrange for project financing for the concessions which are the subject of the feasibility study.

13 P2P Health Systems Inc. 9 SALA has no back-in rights under the agreement. There are no reportable mineral resources for mineralization on the Property. The Property has no past production and therefore no associated mining infrastructure exists. The Property contains five salt lakes, one-half of a sixth salt lake and a portion of a seventh salt lake. Only a small portion of each salt lake comprises open water as isolated lagoons of limited areal extent, the remainder comprising salt pan. The salt lakes are fed by springs along the margins with no creeks or rivers developed. No environmental liabilities are known to exist. Concession locations are shown on Figures 2a to 2g and listed below in Tables 1 to 7. Table 1 Salar de Agua Amarga Concessions Name Type Hectares ROL # Registered Owner* Expiry date Agua 1 Exploration Edgar Vecchiola Trabucco 31-May-10 Agua 2 Exploration Edgar Vecchiola Trabucco 31-May-10 Agua 3 Exploration Edgar Vecchiola Trabucco 31-May-10 Agua 4 Exploration Edgar Vecchiola Trabucco 31-May-10 Agua 5 Exploration Edgar Vecchiola Trabucco 31-May-10 Agua 6 Exploration Edgar Vecchiola Trabucco 31-May-10 Agua 7 Exploration Edgar Vecchiola Trabucco 31-May-10 Agua 8 Exploration Edgar Vecchiola Trabucco 31-May-10 Agua 9 Exploration Edgar Vecchiola Trabucco 31-May-10 Agua 10 Exploration K Edgar Vecchiola Trabucco 31-May-10 Agua 11 Exploration Edgar Vecchiola Trabucco 31-May-10 3,100 * Concessions held in trust for SALA

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15 P2P Health Systems Inc. 11 Table 2 Salar de la Isla Concessions Name Type Hectares ROL # Registered Owner* Expiry date Salar 1 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 2 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 3 Exploration K Edgar Vecchiola Trabucco 31-May-10 Salar 4 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 5 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 6 Exploration K Edgar Vecchiola Trabucco 31-May-10 Salar 7 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 8 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 9 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 10 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 11 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 12 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 13 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 14 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 15 Exploration K Edgar Vecchiola Trabucco 31-May-10 Salar 16 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 17 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 18 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 19 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 20 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 21 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 22 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 23 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 24 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 25 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 26 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 27 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 28 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 29 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 30 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 31 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 32 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 33 Exploration K Edgar Vecchiola Trabucco 31-May-10 Salar 34 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 35 Exploration K Edgar Vecchiola Trabucco 31-May-10 Salar 36 Exploration Edgar Vecchiola Trabucco 31-May-10 Salar 37 Exploration Edgar Vecchiola Trabucco 31-May-10 Isla 1 Exploration Edgar Vecchiola Trabucco 31-May-10 Isla 2 Exploration Edgar Vecchiola Trabucco 31-May-10 Isla 3 Exploration Edgar Vecchiola Trabucco 31-May-10 Isla 4 Exploration Edgar Vecchiola Trabucco 31-May-10 Isla 5 Exploration Edgar Vecchiola Trabucco 31-May-10 Isla 6 Exploration Edgar Vecchiola Trabucco 31-May-10 Isla 7 Exploration K Edgar Vecchiola Trabucco 31-May-10 Isla 8 Exploration Edgar Vecchiola Trabucco 31-May-10 Isla 9 Exploration Edgar Vecchiola Trabucco 31-May-10 Isla 10 Exploration K Edgar Vecchiola Trabucco 31-May-10 Isla 11 Exploration Edgar Vecchiola Trabucco 31-May-10 Isla 12 Exploration Edgar Vecchiola Trabucco 31-May-10 Isla 13 Exploration Edgar Vecchiola Trabucco 31-May-10 Isla 14 Exploration Edgar Vecchiola Trabucco 31-May-10 Isla 15 Exploration Edgar Vecchiola Trabucco 31-May-10 Isla 16 Exploration Edgar Vecchiola Trabucco 31-May-10 Isla 17 Exploration K Edgar Vecchiola Trabucco 31-May-10

16 P2P Health Systems Inc. 12 Name Type Hectares ROL # Registered Owner* Expiry date Isla 18 Exploration Edgar Vecchiola Trabucco 31-May-10 Isla 19 Exploration Edgar Vecchiola Trabucco 31-May-10 Isla 20 Exploration K Edgar Vecchiola Trabucco 31-May-10 Isla 21 Exploration Edgar Vecchiola Trabucco 31-May-10 16,500 * Concessions held in trust for SALA

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18 P2P Health Systems Inc. 14 Table 3 Salar de las Parinas Concessions Name Type Hectares ROL # Registered Owner* Expiry date Parina 1 Exploration Edgar Vecchiola Trabucco 31-May-10 Parina 2 Exploration K Edgar Vecchiola Trabucco 31-May-10 Parina 3 Exploration Edgar Vecchiola Trabucco 31-May-10 Parina 4 Exploration Edgar Vecchiola Trabucco 31-May-10 Parina 5 Exploration K Edgar Vecchiola Trabucco 31-May-10 Parina 6 Exploration Edgar Vecchiola Trabucco 31-May-10 Parina 7 Exploration Edgar Vecchiola Trabucco 31-May-10 Parina 8 Exploration Edgar Vecchiola Trabucco 31-May-10 Parina 9 Exploration Edgar Vecchiola Trabucco 31-May-10 Parina 10 Exploration Edgar Vecchiola Trabucco 31-May-10 Parina 11 Exploration Edgar Vecchiola Trabucco 31-May-10 Parina 12 Exploration Edgar Vecchiola Trabucco 31-May-10 Parina 13 Exploration Edgar Vecchiola Trabucco 31-May-10 Parina 14 Exploration Edgar Vecchiola Trabucco 31-May-10 Parina 15 Exploration Edgar Vecchiola Trabucco 31-May-10 Parina 16 Exploration Edgar Vecchiola Trabucco 31-May-10 Parina 17 Exploration Edgar Vecchiola Trabucco 31-May-10 Parina 18 Exploration Edgar Vecchiola Trabucco 31-May-10 Parina 19 Exploration Edgar Vecchiola Trabucco 31-May-10 Parina 20 Exploration Edgar Vecchiola Trabucco 31-May-10 5,400 * Concessions held in trust for SALA

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20 P2P Health Systems Inc. 16 Table 4 Salar Grande Concessions Name Type Hectares ROL # Registered Owner* Expiry date Grande 1 Exploration Edgar Vecchiola Trabucco 31-May-10 Grande 2 Exploration Edgar Vecchiola Trabucco 31-May-10 Grande 3 Exploration K Edgar Vecchiola Trabucco 31-May-10 Grande 4 Exploration Edgar Vecchiola Trabucco 31-May-10 Grande 5 Exploration Edgar Vecchiola Trabucco 31-May-10 Grande 6 Exploration Edgar Vecchiola Trabucco 31-May-10 Grande 7 Exploration Edgar Vecchiola Trabucco 17-May-10 Grande 8 Exploration Edgar Vecchiola Trabucco 17-May-10 Grande 9 Exploration K Edgar Vecchiola Trabucco 17-May-10 Grande 10 Exploration Edgar Vecchiola Trabucco 17-May-10 Grande 11 Exploration Edgar Vecchiola Trabucco 17-May-10 Grande 12 Exploration Edgar Vecchiola Trabucco 17-May-10 Grande 13 Exploration Edgar Vecchiola Trabucco 17-May-10 Grande 14 Exploration Edgar Vecchiola Trabucco 17-May-10 Grande 15 Exploration Edgar Vecchiola Trabucco 17-May-10 4,000 * Concessions held in trust for SALA

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22 P2P Health Systems Inc. 18 Table 5 Salar de Aguilar Concessions Name Type Hectares ROL # Registered Owner* Expiry date Aguilar 1 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 2 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 3 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 4 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 5 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 6 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 7 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 8 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 9 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 10 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 11 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 12 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 13 Exploration K Edgar Vecchiola Trabucco 16-May-10 Aguilar 14 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 15 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 16 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 17 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 18 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 19 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 20 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 21 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 22 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 23 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 24 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 25 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 26 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 27 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 28 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 29 Exploration Edgar Vecchiola Trabucco 16-May-10 Aguilar 30 Exploration K Edgar Vecchiola Trabucco 16-May-10 Aguilar 31 Exploration Edgar Vecchiola Trabucco 16-May-10 8,800 * Concessions held in trust for SALA

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24 P2P Health Systems Inc. 20 Table 6 Salar de Piedra Parada Concessions Name Type Hectares ROL # Registered Owner* Expiry date Parada 1 Exploration Edgar Vecchiola Trabucco 31-May-10 Parada 2 Exploration Edgar Vecchiola Trabucco 31-May-10 Parada 3 Exploration Edgar Vecchiola Trabucco 31-May-10 Parada 4 Exploration Edgar Vecchiola Trabucco 31-May-10 Parada 5 Exploration Edgar Vecchiola Trabucco 31-May-10 Parada 6 Exploration Edgar Vecchiola Trabucco 31-May-10 1,500 *Concessions held in trust for SALA Table 7 Salar de Maricunga Concession Name Type Hectares ROL # Registered Owner* Expiry date Salmuera 1-22 Exploitation Empresa Vecchiola N/A * Concessions held in trust for SALA

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27 P2P Health Systems Inc. 23 The following brief description of the Chilean mining code was provided by Dr. Luis Ignacio Silva. In accordance with Chilean mining legislation, there are two types of mining concessions in Chile, exploration concessions and exploitation concessions. The principal characteristics of each are as follows: Exploration Concessions: the titleholder of an exploration concession has the right to carry out all types of mining exploration activities within the area of the concession. Exploration concessions can overlap or be granted over the same area of land; however, the rights granted by an exploration concession can only be exercised by the titleholder with the earliest dated exploration concession over a particular area, as indicated by their ROL number. For each exploration concession the titleholder must pay an annual fee of approximately US$1.10 per hectare to the Chilean Treasury and exploration concessions have a duration of two years. Concession payments are therefore (39,300 x 1.10) = $43,200. The ends of the two-year periods are May 16 and May 31, At the end of this period, they may (i) be renewed as an exploration concession for two further years in which case at least 50% of the surface area must be reduced, or (ii) be converted, totally or partially, into exploitation concessions. A titleholder with the earliest dated exploration concession has a preferential right to an exploitation concession in the area covered by the exploration concession, over any third parties with a later dated exploration concession for that area or without an exploration concession at all and must oppose any applications made by third parties for exploitation concessions within the area in order for the exploration concession to remain valid. Exploitation Concessions: The titleholder of an exploitation concession is granted the right to explore and exploit the minerals located within the area of the concession and to take ownership of the minerals that are extracted. Exploitation concessions can overlap or be granted over the same area of land; however, the rights granted by an exploitation concession can only be exercised by the titleholder with the earliest dated exploitation concession over a particular area. Exploitation concessions are of indefinite duration and an annual fee is payable to the Chilean Treasury in relation to each exploitation concession of approximately US$5.80 per hectare. Where a titleholder of an exploration concession has applied to convert the exploration concession into an exploitation concession, the application for the exploitation concession and the exploitation concession itself is back dated to the date of the exploration concession. A titleholder to an exploitation concession must apply to annul or cancel any other exploitation concessions which overlap with the area covered by its exploitation concession within a certain time period in order for the exploitation concession to remain valid. From the date that an application for a mining concession is made to the mining court, be it an exploration or an exploitation concession, the applicant has the right to transfer or grant an

28 P2P Health Systems Inc. 24 process of being constituted and the court has no discretion to refuse the final grant of the concession. Prior to the start of the Phase II drill program, an Environmental Impact Study (Declaración de Impacto Ambiental DIA ) must be submitted to the authorities for permitting of the work program. No permits are needed to carry out the proposed program detailed as Phase I. 4.3 Third-Party Concessions Both Salar Grande and Salar Aguilar have pre-existing concessions within the concession boundaries as detailed in Tables 8 and 9, and Figures 2d and 2g. Table 8 Salar Grande Third Party Concessions Name Type Hectares* ROL # Registered Owner Expiry date Don Segundo III 4 Exploration Soquimich (SQM) S.A. 15-Apr-10 Don Segundo III 5 Exploration Soquimich (SQM) S.A. 15-Apr-10 Golondrina E Exploration Sergio Gomez Nuñez 28-Dec * * Area overlapping Grande 1, 8, 9 and 11. Table 9 Salar de Aguilar Third Party Concession Name Type Hectares ROL # Registered Owner Expiry date Valparaiso y Ots Exploitation Codelco N/A 4.4 Surface Rights In accordance with the Chilean Mining Code any titleholder of a mining concession, whether for exploration or exploitation, shall have the right to establish an occupation easement over the surface land as required for the comfortable exploration or exploitation of its concession. In the event that the surface property owner is not agreeable to grant the easement voluntarily, the titleholder of the mining concession may request said easement before the Courts of Justice who shall grant it upon determination of the compensation for losses as deemed warranted. No surface ownership issues are known to exist in the area of the salars that are the subject of this Report.

29 P2P Health Systems Inc Access, Climate, Local Resources, Infrastructure, and Physiography 5.1 Access Access to Salar de Agua Amarga and Salar de Isla is available via leaving the Pan American Highway (Highway 5) at Aqua Verde approximately 200 km south of Antofagasta. From Agua Verde, an all season dirt road (B-885) leads to the Salar de Azufrera. From the Salar de Azufrera excellent dirt exploration roads lead south to the north end of the Salar de Agua Amarga and southeast to the north and northeast sides of Salar de la Isla (Figures 1 and 4). The topographic map for the area shows a road down the west side of Salar de la Isla. This road was unable to be located during the field visit. Access to the Salar de las Parinas is available from the northeast side of Salar de la Isla via a 4- wheel drive only road, which road continues south and west to Salar Grande. From Salar Grande the 4-wheel drive road continues around the north and west sides of the salar where it swings westerly to Salar de Aguilar (Figure 4). Salar de Aguilar is also accessible from the town of El Salvador via Highways C-13 and C-173 to the Salar de Pedernales, along Highway C157 on the west side of the salar, and thence in a northeasterly direction to the north end of Salar de Pedernales from whence a 4-wheel drive road continues northerly and northeasterly through the Salar de Infieles to Salar Aguilar (Figure 4). In terms of actual distance Salar de Aguilar lies about 30 km south of the south end of the Salar de Agua Amarga, 30 km southwest of the north end of the Salar de la Isla, and 20 km west of the south end of the Salar de la Isla. Google Earth imagery shows exploration roads extending west and south from Salar de Agua Amarga to within 12 km the north end of Salar de Aguilar. Salar Grande lies 15 km to the south of the south end of Salar de la Isla and Salar de las Parinas lies less than 20 km to the south-southeast of the north end of the Salar de la Isla. The Salar de Piedra Parada is accessible from the town of El Salvador via Highways C-13 and C- 173 to the Salar de Pedernales and southerly to La Ola. Immediately south of La Ola, which comprises a dam and pumping station beside the highway, an all-season dirt road swings easterly to another dam at the mouth of the Rio Juncalito. From this location a 4-wheel drive road follows the Rio Juncalito easterly to the junction of the Quebrada de Pio Negro from where the road continues northerly to the Salar de Piedra Parada (Figure 4). Excellent access to the Salar de Maricunga is via Highway 31 from Copiapó to the north end of the salar or via C-601 to the south end of the salar (Figure 4). The salar crusts, comprising massive coarsely crystalline rock salt, make driving across the salars impossible and walking difficult (Photo 2). Excellent roads can be constructed along and across the salars, however, when the salt is compressed by heavy equipment (Photo 1).

30 P2P Health Systems Inc. 26 Photo 1 View of road constructed across Salar de Azufrera to old sulphur recovery mill site 5.2 Climate Northern Chile is characterized by extreme aridity and sparse vegetation at elevations below 1900 metres. This region, which includes the Coastal Range and Central Valley, corresponds to the approximate limit of the Atacama Desert. The Atacama is ranked as the world s driest desert. As well, the high Andes of northern Chile are extremely arid in comparison to other mountain ranges of the world with a snowline near 6000 metres. Perennial snowfields are only found on a few peaks extending above 6300 metres. Closed basins in and around the Atacama Basin are estimated to have a mean annual precipitation rate of from 1.5 to 5 cm and a mean annual temperature of 11 C (Stoertz and Erickson, 1974). The climate becomes progressively cooler and less arid to the east in the Andean Highlands. In the Andean Highlands of Atacama Province precipitation occurs mainly in the fall and winter months of May to September. At elevations above 3,600 metres mean annual precipitation averages about 20 cm, predominantly as snow. Mean annual temperatures in individual basins in the Andes is estimated to range from -3 C to 8 C and is estimated to average 2 C.

31 P2P Health Systems Inc Local Resources and Infrastructure No infrastructure exists within the area of the northern 5 salars or the Salar de Piedra Parada. As noted in Section 5.1, well maintained roads link Salar de Agua Amarga and Salar de la Isla to the paved Pan American Highway (Highway 5), some 120 kilometres to the west. Highway 5 links Copiapó and Antofagasta. Twenty kilometres east of Highway 5, Highway B-895C, comprising a dirt road paralleling a now unused railway line, leads to the community of Diego de Almagro, located approximately 120 km to the south (Figure 4). Diego de Almagro is a small mining town that could supply semi-skilled and skilled labour to any development on the Property. Chile also supplies high quality mining professionals. Diego de Almagro is also located on a rail line linking the port of Chañaral to the smelter at Potrerillos (Figure 1). A power transmission line parallels Highway 5 at Agua Verde. 5.4 Physiography The five northern salars are located in the Andean Highlands, within north-south basins east of the Cordillera Domeyko and west of the border between Chile and Argentina. Salar de la Isla, Salar de las Parinas and Salar Grande occur at elevation of approximately 3900 metres. To the east and west of the Salar de la Isla elevations are in excess of 5700 metres. The Salar de Piedra Parada is located in a valley trending northwest to southeast and surrounded by peaks from 4400 to 5500 metres. The Salar de Maricunga is located in a broad north-south trending valley at an elevation of 3700 metres with the Cordillera Claudio Gay to the east with elevations in excess of 5000 metres. To the west elevations reach 4300 metres. The very limited vegetation is limited to bunch grasses and small thorny bushes.

32 P2P Health Systems Inc History 6.1 Area History Charles Darwin visited this region from April to June, 1835 on an overland journey from Coquimbo to Copiapó, stopping frequently en route to visit existing gold and copper mines and to, in his words, geologise. Darwin s view overall of the region was that It was almost a pity to see the sun shining constantly over so useless a country; such splendid weather ought to have brightened fields and pretty gardens. It is this constant shining of the sun however, combined with minimal precipitation that has allowed the development of salars or salt lakes and flats containing economic concentrations of lithium and potassium in the region. The salars of Northern Chile, principally those of the Central Valley, in the lower westerly part of the Atacama Desert, were, up to the end of World War I, an important source of nitrates, principally used in the production of fertilizers and gunpowder. The Haber process, also called the Haber Bosch process, developed in Germany in 1913, is the nitrogen fixing reaction of nitrogen gas and hydrogen gas, over an enriched iron catalyst, to produce ammonia on a commercial basis (Wikipedia). It was not until the early 20th century that this method was developed to harness the atmospheric abundance of nitrogen to create ammonia, which can then be oxidized to make the nitrates and nitrites essential for the production of nitrate fertilizer and munitions. It has been suggested that without the Haber process, Germany, without access to the saltpeter deposits of northern Chile, controlled at the time by British interests, would not have fought World War I or would have had to surrender years earlier (Wikipedia). Many Chilean nitrate deposits continued to be mined for over a century, until the 1940s when declining value led to the closing of many mines. Chile still has the largest world reserves of caliche, with active mines producing sodium nitrate, potassium nitrate, sodium sulphate and iodine, all obtained by the processing of the caliche. Chile therefore has a long history of economic production of various elements and compounds from its many evaporite deposits and so represents an a region with elevated potential for lithium concentrations. In 1961 and 1962 the United States Geological Survey, in cooperation with the Instituto de Investigaciones Geológicas of Chile carried out an investigation of the saline deposits of northern Chile with an emphasis on nitrates. The salars of northern Chile were later the subject of another United States Geological Survey professional paper authored in 1974 by Stoertz and Ericksen. This paper was designed to study the total environment of existing salar crusts in the Atacama Desert and Andean Highlands to

33 P2P Health Systems Inc. 29 gain a better understanding of processes that modify them and to help interpret past climates of the region. From 1995 to 1998 a group comprising the Chilean Ministerio de Obras Publicas Dirección General de Aguas, the Universidad Católica del Norte, and the French Institut de Recherche pour le Développement, known collectively as the DGN-UCN-IRD, carried out a program examining the geochemistry of the closed basins of northern Chile. Sampling results from this program pertaining to the subject salars are included within this Report. 6.2 Previous Work The author is not aware of any previous exploration work having been carried out by P2P on the Property. As noted in the previous section, in 1995 the Chilean Ministry of Public Works - Water Division, the Catholic University of the North, and France s Institut de Recherche pour le Dévelloppement initiated an agreement to study the salars of northern Chile. This work, described in a January, 1999 publication entitled Geochimica de Aguas en Cuencas Cerrada: I, II y III Regiones Chile authored by Risacher, Alonso and Salazar was designed, in part, to test the chemical components of dilute waters entering the salars, the brines derived from these by evaporation, and to determine the factors that control the hydrogeochemistry of the salars. This work in part covered the 7 salars that are the subject of this Report. Results of this sampling, including sample locations and selected analytical results, are shown on Figures 5a, 6a, 7a, 8a, 9, 10 and 11a and listed in Tables 11, 13, 16, 19, 22, 23 and 24.

34 P2P Health Systems Inc Geology 7.1 Regional Geology The Andean Highlands are underlain principally by volcanic flows, tuffs and breccias from Pliocene to Holocene in age (Figure 3). The older volcanic rocks are chiefly of volcanic composition, predominantly andesitic composition with lesser basalt and rhyolite, and are thought to have erupted from fissures and volcanic centres. The younger volcanic rocks are chiefly andesitic to basaltic and are associated mainly with volcanic cones or strata-volcanoes. There are an estimated 800 volcanoes in northern Chile, more than 30 of which are in excess of 5800 metres in elevation. Locally ridges and hills of Jurassic to Cretaceous age, comprising sedimentary and volcanic rocks as well as Cretaceous plutonic rocks rise above the younger terrain. Deep valleys that drain westward across the front of the Andes also expose underlying Jurassic and Cretaceous age rock. As most of the Andes in northern Chile are within the region of interior drainages, most of the erosional products of the region have remained within the closed basins. Sedimentary basin fill includes alluvium, lake and playa sediments, salars, wind-blown soil and volcanic ash. Many of the basins in the Andean Highlands appear to be a result of faulting. The eastern boundaries of Salar de la Isla for example exhibit distinctly linear sides, possibly as a result of faulting. Many of the Andean Highlands salars are also asymmetrically situated within their basins as a result of faulting and tilting. Stoertz and Ericksen (1974) observe that the Salar de Maricunga, among others, appears to have been down-tilted to the northwest as evidenced by structural features. The Salar de las Parinas may be similar in this respect showing a distinct linearity from southeast to northwest.

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36 P2P Health Systems Inc Property Geology The geology of the northern Chilean salars is described by Stoertz and Ericksen (1974) who described the region as having an exceptional variety of types of hard saline crusts that are rare in other deserts. Six general types of saline crusts are described: 1) layered massive rock salt with a rugged surface 2) slabby or nodular silty rock salt 3) rugged gypsum or anhydrite 4) massive coarsely crystalline rock salt 5) smooth rock salt 6) silty, nitrate-bearing saline crust Photo 2 Surface of Salar de Agua Amarga showing coarsely crystalline rock salt surface. The salars that form the Property, in general have crusts or combination of crusts that correspond to types 1, 4 and 5. As is evident in Photo 3, the smooth crusts often exhibit polygonal structures. Most of the lagoons sampled during the recent property visit are shallow (less than 25 cm in depth) and are underlain by a smooth salt crust.

37 P2P Health Systems Inc. 33 Photo 3 Sample site at Salar de las Parinas showing smooth salt crust both beside and underlying the shallow lagoon, and the development of polygons. Rugged gypsum beds were noted on the east margin of Salar de Agua Amarga but were not noted elsewhere. The salars are largely filled with detrital material derived from weathering of the surrounding highlands. Photo 4, looking westerly across the north end of Salar Grande shows, in the foreground and the background, the large amount of alluvial material flowing into this closed basin. The size of the current basin may therefore not be indicative of the original size of the basin which may have been partly in-filled with alluvial material that may be acting as aquifers containing potentially lithium-bearing saline brines.

38 P2P Health Systems Inc. 34 Photo 4 View westerly across the northern end of Salar Grande showing broad alluvial plains in foreground and background. The material within these plains may have acted as a source for lithiumbearing fluids. The photo shows approximately 6 km of the 11 km long salar. The width of the salar in the centre of the photo is 3 km.

39 P2P Health Systems Inc Deposit Types Lithium is found in commercial quantities in continental brine deposits, volcanic in origin, that are present in desert environments, where they occur in playas, saline lakes, or salt flats (salars or salares) where lithium-bearing solutions have been concentrated by evaporation (Kogel et al, 2006). Due to their uncomplicated and generally low capital cost of plant construction and production salar type lithium deposits can represent an attractive exploration target and compare favourably to the magmatic silicate type deposits being currently evaluated in Canada. At Searles Lake, California, with a lithium concentration in brines of 70 parts per million ( ppm ), production of dilithium phosphate production began in During World War II the Clayton Valley, Nevada salt marsh was investigated as a source of lithium but it was not until the 1960s that this deposit was exploited on a commercial basis by the Foote Mineral Company. Following the discovery of lithium in Clayton Valley brines, exploration revealed the presence of lithium in other playas and lakes around the world, with concentrations ranging from 200 to 2000 ppm in the Salar del Hombre Muerto, Argentina; 100 to 700 ppm in the Salar de Uyuni, Bolivia; 1000 to 7000 ppm in the Salar de Atacama, Chile; and 100 to 400 ppm in various Chinese deposits. At Clayton Valley the basin comprises interbedded fine-grained sediments and halite, volcanic ash layers and tufas. Although the halite layers are reported to contain large lithium reserves, production comes from an unconsolidated ash aquifer covering 54 km² at an average depth of 460 m. Other reservoirs have been identified by exploration. The sources of the lithium-bearing brines are geothermal fluids issuing from faults, increased lithium concentrations in Tertiary lacustrine sediments, high-lithium-bearing rhyolites, and concentration of lithium by solar evaporation. In the central area of Clayton Valley the lithium content ranged from 100 to 800 ppm and the discovery well at 229 m depth contained 678 ppm when pumped at 1700 litres per minute. The average brine analysis when production of lithium carbonate began in 1966 was about 400 ppm and since that time has been declining. In 1998 the concentration was reported as 100 to 300 ppm lithium (Kogel et al, 2006). An extensive well field supplies brine into 1600 ha of solar evaporation ponds and over 12 to 18 months the lithium concentration of the brines increases to 6,000 ppm. At this point the lithium chloride concentrate is pumped to a recovery plant, treated with soda ash and the resulting lithium carbonate precipitate is filtered, dried and shipped. At the Salar de Atacama, in Argentina, exploration began in 1975 and production began in 1984 on what is presently the world's richest commercial brine deposit. The salar contains a salt nucleus consisting almost exclusively of halite with marginal facies of sulphate and carbonate. The source of lithium in the basin is believed to be volcanic in origin. From the north lithiumbearing fluids from the El Tatio geothermal field enters the salar with a concentration of 47 ppm. The other source is believed to be saline lakes in the Andean Cordillera, east of the Salar de

40 P2P Health Systems Inc. 36 Atacama. Structural interpretations suggest the presence of numerous east-west lineaments that carry the lithium-bearing solutions into the basin from these lakes (Garrett, 2004). In Bolivia, the Salar de Uyuni is quoted as containing one sixth of the world s lithium resources (Evans, 2009) but has problems with a low lithium concentration and a high Mg/Li ratio which will complicate and increase the cost of processing. The richest part of the resource is contained within a very thin aquifer and the salar floods yearly, diluting grades and complicating the construction of evaporation ponds.

41 P2P Health Systems Inc Mineralization Lithium is a comparatively rare element always found in very low concentrations in many rocks and some brines. The average amount in the earth s crust has been estimated to range from 6 ppm to as high as 60 ppm. There are a large number of lithium mineral and brine deposits worldwide but only a comparative few are of actual or potential commercial value (Garrett, 2004). Many deposits are too low grade or located in areas too remote to make commercial recovery of lithium feasible. Lithium deposits have been formed due to lithium s higher solubility than most other cations. It often is concentrated in flowing and cooling magma and/or its accompanying fluids as well as in evaporating brines. The high lithium brines are postulated to have obtained most of their lithium from geothermal waters with some derived from surface leaching of volcanic ash, clays and other rocks. Lithium however is difficult to leach from the lattices of rocks and minerals, so little is dissolved unless the water temperatures are very hot. An extrapolation therefore is that waters containing high background lithium were probably derived from hot springs. When these dilute geothermal waters are concentrated by the evaporation that occurs in arid climates in closed basins comparatively strong lithium brines have been formed. These brines can be further upgraded by evaporation to create a much more concentrated brine. At elevation in the Andean Highlands, with rates of evaporation estimated at 8 to 10 times the rate of precipitation, as shown in Table 10 (Risacher et al, 1999), the salars are ideally situated to enhance the development of lithium- and potassium-rich brines.

42 P2P Health Systems Inc. 38 Table 10 Salar Parameters Basin Salar Lagoon Area Area Area (km 2 ) (km 2 ) (km 2 ) Annual Precip. (mm) Evaporation Potencial (mm) Salar Name Elevatio n (m) Agua Amarga La Isla Las Parinas to Grande Aguilar ~ 200 m² Piedra Parada to Maricunga

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44 P2P Health Systems Inc Exploration No previous exploration for lithium-bearing brines with the intention of the exploitation of these brines has been carried out on the seven salars that comprise the Property. A regional scientific study of the salars of northern Chile by DGN-UCN-IRD, as noted in Sections 6.1 and 6.2 does however contain information that is pertinent to demonstrating the prospectivity of the salars that form the Property. Results of this study are detailed below and shown on Figures 5a, 6a, 7a, 8a, 9, 10 and 11a. As part of the field visit carried out from June 18 to June 25, 2009 twenty five water samples were collected and submitted for analysis to Acme Analytical Laboratories Ltd ( Acme ) in Vancouver, British Columbia Water Sampling Of the 25 water samples noted above, 23, including 2 duplicate samples, were collected either from lagoons along the boundaries of, or springs flowing into Salar de Agua Amarga (5 samples), Salar de la Isla (7, including 1 duplicate), Salar de las Parinas (4), Salar Grande (3) and Salar de Maricunga (4, including 1 duplicate). One comparison sample was collected from Salar de Azufrera, to the north of Salar de Agua Amarga. One blank sample, comprising commercially available bottled mineral water, was also added to the sample stream. Many of the lagoons were covered during the field visit by ice sheets and it was necessary to break through the ice to collect a sample. The presence of ice coverage is likely a function of low salinity of the lagoonal waters but may also be affected by whether the water is emanating from a spring. In shallower lagoons the latter is not likely and ice cover is probably a factor of salinity and air temperature Target Description and Exploration Results Salar de Agua Amarga Six water samples were collected by DGN-UCN-IRD during their 1995 to 1998 study program and outlined in their 1999 report. Sample details and selected results of this sampling are contained in Table 11 with locations and Li, K and Na values shown on Figure 5a. Table 11 Salar de Agua Amarga Water Geochemistry (1999) Sample ID Source Li mg/l K mg/l Na mg/l AMA-1 Lagoon AMA-2 Lagoon AMA-3 Spring AMA-4 Aquifer AMA-5 Spring AMA-6 Lagoon

45 P2P Health Systems Inc. 41 Five water samples were collected by the author in June, 2009 from the Salar de Agua Amarga. Sample data are contained in Table 12 and locations are shown on Figure 5b. Discussion of Results Table 12 Salar de Agua Amarga Water Geochemistry (2009) Sample ID Source Li mg/l K mg/l Na mg/l Sump Lagoon Lagoon Lagoon Lagoon The 1999 reported sampling contained lithium and potassium values ranging from 3 to 157 ppm lithium and 67 to 2490 ppm potassium. The lower values occur at the southwest corner of the salar in an area where spring waters enter the salar. The most anomalous sample (AMA-4 with 157 ppm Li) occurs at the northwest corner of the salar (Figure 5a). The 2009 sampling showed similar results to the 1999 reported sampling (Figure 5b). Of interest is the variation in lithium content of the 2009 samples. One 2009 sample (30212 with 145 ppm Li) was collected from a sump excavated at the northwest corner of the salar, presumably at the same location as AMA-4. This sump presumably contains sub-surface basinal brines as compared to the surface brines collected from the east and south sides of the salar.

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48 P2P Health Systems Inc Salar de la Isla Nineteen water samples were collected in the northern part of Salar de la Isla by DGN-UCN-IRD from a combination of springs and lagoons. Details and results of this sampling are contained in Table 13 with locations and Li, K and Na values shown on Figure 6a. Table 13 Salar de la Isla Water Geochemistry (1999) Sample ID Source Li mg/l K mg/l Na mg/l ISL-1 Spring ISL-2 Lagoon ISL-3 Lagoon ISL-4 Spring ISL-5 Lagoon ISL-6 Lagoon ISL-7 Lagoon ISL-8 Aquifer ISL-9 Spring ISL-10 Lagoon ISL-11 Lagoon ISL-12 Aquifer ISL-13 Spring ISL-14 Lagoon ISL-15 Creek ISL-16 Spring ISL-17 Lagoon ISL-18 Spring ISL-19 Lagoon Seven water samples were collected by the author from Salar de la Isla. Five of these water samples, including a duplicate sample, were collected from lagoons along the margins of the salar, three of which were fed by running springs. Two of the collected water samples were obtained from these springs (Photo 5). Sample data are contained in Table 14 and locations are shown on Figure 6b. Table 14 Salar de la Isla Water Geochemistry (2009) Sample Li K Na Source ID mg/l mg/l mg/l Lagoon Spring Lagoon Lagoon Duplicate Lagoon Spring

49 P2P Health Systems Inc. 45 Photo 5: View to southeast across Salar de la Isla. Sample was collected from spring water in the foreground emanating from a rock bluff immediately behind the photo location. Sample was collected from the lagoon area. The distance across the salar in the direction of the photograph is approximately 13.5 km. The lagoon in the middle distance is approximately 200 metres in width. Discussion of Results In the 1999 reported sampling only one of the water samples collected from lagoons (as opposed to springs) in Salar de la Isla contained less than 100 ppm lithium with nine values greater than 200 ppm, of which 5 contained greater than 500 ppm lithium (Figure 6a). Of the 9 samples containing less than 100 ppm, six were sampled from springs flowing into the salar. Sample ISL- 15 however, collected from a creek flowing into the northeast side of the salar, contained 221 ppm lithium. Nearby, a spring sampled as ISL 13 returned a value of 87 ppm lithium. These values, though unverified, are higher than the lithium-bearing fluids from the El Tatio geothermal field entering the Salar de Atacama as described in Section 15 and containing on average 47 ppm lithium. The 2009 sampling (Figure 6b) contained values ranging from 29 to 220 ppm lithium from springs and lagoons. The 220 ppm lithium value was contained in a sample (30204) collected at the same location as ISL-17 on the east-central side of the salar. This sample was collected in a lagoon downstream from a flowing creek emanating from a creek. A re-sampling of ISL-13 as sample returned a value of 33 ppm lithium.

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52 P2P Health Systems Inc Salar de las Parinas Seven water samples were collected from Salar de las Parinas by DGN-UCN-IRD from a combination of springs and lagoons. Details and results of this sampling are contained in Table 15 with locations and Li, K and Na values shown on Figure 7a. Table 15 Salar de las Parinas Water Geochemistry (1999) Sample Li K Na Source ID mg/l mg/l mg/l PAR-1 Spring PAR-2 Lagoon PAR-3 Lagoon PAR-4 Spring PAR-5 Lagoon PAR-6 Spring PAR-7 Lagoon Four water samples were collected by the author from the salar. Sample details and results are contained in Tables 16 and shown on Figure 7b. Discussion of Results Table 16 Salar de las Parinas Water Geochemistry (2009) Sample Li K Na Source ID mg/l mg/l mg/l Spring Lagoon Lagoon Lagoon Significant lithium values of 273 and 477 ppm, contained in the 1999 reported samples from the northern end of the salar, are confirmed by samples and with lithium values of 135 and 276 ppm collected from the same area during the field visit. The samples are proximal to anomalous values collected from the east side of Salar de la Isla and suggest a common source. A significant inflow of water at the south end of the salar was sampled as and the low Li analysis may suggest dilution of the surface waters at the south end of the salar.

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55 P2P Health Systems Inc Salar Grande Four water samples were collected in a localized area at the southwest corner of Salar Grande by DGN-UCN-IRD. Details and results of this sampling are contained in Table 17 with locations and Li, K and Na values shown on Figure 8a. Table 17 Salar Grande Water Geochemistry (1999) Sample Li K Na Source ID mg/l mg/l mg/l GRA-1 Spring GRA-2 Pond GRA-3 Lagoon GRA-4 Pond Three water samples were collected by the author along the northeast side of Salar Grande. Details and results of this sampling are contained in Table 18 with locations and Li, K and Na values shown on Figure 8b. Discussion of Results Table 18 Salar Grande Water Geochemistry (2009) Sample ID Source Li mg/l K mg/l Na mg/l Lagoon Lagoon Lagoon The 1999 sampling, as noted, was done in a limited area at the southwestern end of the salar. Only one sample contained a significant lithium value of 123 ppm. The 2009 sampling was carried out on the northeast side of the salar and could not confirm the anomalous values previously seen in 1999 in the southwest. The low salt content of the 1999 samples, however, likely indicates that relatively fresh water was sampled.

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58 P2P Health Systems Inc Salar de Aguilar Three water samples were collected in a localized area at the southwest corner of Salar Aguilar by DGN-UCN-IRD. Details and results of this sampling are contained in Table 19 with locations and Li, K and Na values shown on Figure 9. Table 19 Salar de Aguilar Water Geochemistry (1999) Sample ID Source Li mg/l K mg/l Na mg/l AGI-1 Pond AGI-1a Pond AGI-2 Pond No samples were collected from Salar de Aguilar during the field visit due to difficulties with access. Discussion of Results All three of the samples reported in 1999 contained anomalous lithium values to 337 ppm from surface samples. These samples were clustered in a limited area in the southwestern corner of the salar and suggest the salar is significantly anomalous in lithium.

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60 P2P Health Systems Inc Salar de Piedra Parada Fourteen water samples were collected from the Salar de Piedra Parada by DGN-UCN-IRD. Details and results of this sampling are contained in Table 20 with locations and Li, K and Na values shown on Figure 10. Table 20 Salar de Piedra Parada Water Geochemistry (1999) Sample ID Source Li mg/l K mg/l Na mg/l PIE-1 Spring PIE-2 Lagoon PIE-3 Pond PIE-4 Spring PIE-5 Lagoon PIE-6 Lagoon PIE-7 Pond PIE-8 Spring PIE-9 Lagoon PIE-10 Lagoon PIE-11 Spring PIE-12 Lagoon PIE-13 Spring PIE-14 Lagoon No samples were collected from Salar de Piedra Parada during the field visit due to difficulties with access. Discussion of Results Only 1 of the 14 water samples reported in 1999 contained greater than 100 ppm. Potassium values were also, in general, low.

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62 P2P Health Systems Inc Salar de Maricunga Perhaps given the ease of access, some 30 samples were collected in and around Salar de Maricunga by DGN-UCN-IRD, including lagoons, water holes, springs and creeks. Details and results of 18 of these samples, those within and proximal to the salar are contained in Table 21 and shown on Figure 11a. Table 21 Salar de Maricunga Water Geochemistry (1999) Sample ID Source Li mg/l K mg/l Na mg/l MAR-5 Creek < MAR-10 Lagoon MAR-11 Lagoon MAR-12 Spring MAR-13 Spring MAR-14 Lagoon MAR-15 Spring MAR-16 Pond MAR-17 Pond MAR-19 Pond MAR-20 Lagoon MAR-21 Spring MAR-22 Lagoon MAR-23 Creek MAR-24 Lagoon MAR-25 Lagoon MAR-26 Spring MAR-27 Spring < MAR-30 Creek < Four water samples, including one duplicate, were collected by the author along the northeast side of Salar de Maricunga from lagoons and a water hole excavated along the salar edge. Details and results of this sampling are contained in Table 22 with locations and Li, K and Na values shown on Figure 11b. Discussion of Results Table 22 Salar de Maricunga Water Geochemistry (2009) Sample ID Source Li mg/l K mg/l Na mg/l Lagoon Duplicate Lagoon Lagoon A review of the 1999 reported sampling shows that the bulk of the sampling was carried out on the southern half of the salar and that lithium and potassium values are low. The two highest

63 P2P Health Systems Inc. 59 lithium values obtained, of 205 and 1050 ppm, were collected on the west side of the salar (Figure 11a). The 2009 sampling indicates that higher lithium values are also present on the north and northwest sides of the salar with limited sampling having been carried out in the north central part of the salar between the areas of the 1999 and 2009 sampling.

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66 P2P Health Systems Inc Drilling No drilling has been carried out on the Property. 12. Sampling Method and Approach Twenty-three water samples were collected from June 20 to 25 from lagoons and running springs along the edges of 5 salars visited during the field. In addition one comparison water sample was taken from a lagoon in Salar de Azufrera, to the north of Salar de Agua Amarga and one blank sample, comprising commercially available bottled water, was shipped to the analytical laboratory as part of the submitted samples. As is shown in Photo 6, the lagoons along the edges of the salars were often shallow, with soft mud along the edges. Samples were therefore collected using a plastic container attached to a 3- metre long metal pole. At each sample site the sampling container was rinsed using water from the sample site to ensure that no residue was carried over from the previous sample. The sample container was also rinsed and a fresh sample comprising approximately one litre of water was collected and placed in the container. The sample container had previously been labelled with a unique identifying number. The sample container, once filled, was taped closed (Photo 7). The bottles of samples once sealed with tape were placed in sealed containers and, at the end of the program were driven to the offices of Georecursos in Santiago, Chile. At Georecursos the seals were examined for tampering by the author. Before leaving the field, 3 duplicates of water samples and a sample of the blank material were collected by the author, sealed and later transported to Canada as check samples. Inasmuch as the samples comprise fluid, and were not collected from a mineralized horizon or outcrop as is normal practice in mineral exploration, variability within samples would be expected to be minimal and the samples are believed to be representative. As noted in Section 20, results obtained from the sampling of surface waters may vary however from season-toseason and from year-to-year as a result of factors that affect the concentrating processes. Such factors would not affect a mineralized zone in normal mineral exploration. Some layering of brines could be expected perhaps as a result of density within large bodies of water but as the lagoons sampled on the Property were very shallow such layering would not be expected. Any contamination from sample to sample would be unlikely due to thorough rinsing of the sample equipment before samples were collected.

67 P2P Health Systems Inc. 63 Photo 6 Water sampling from a shallow lagoon on the margin of Salar de las Parinas utilizing a container attached to a 3-metre long pole. As is typical of many of the sample sites the shallow lagoon is underlain by salt. Photo 7 Sampling container attached to a 3-metre long pole. Water samples were placed in a prenumbered bottle and sealed with tape.